Martin Lewis returned to television screens on Thursday night for the new series of his award-winning Money Show Live in a programme dominated by the energy crisis.

The founder of MoneySavingExpert.com began the show by telling viewers: “The energy market is in crisis. Today’s cheapest fixes cost 60% more than a year ago. Six suppliers have gone bust in a fortnight and if things don’t improve, many, many more may follow, leaving few left.”

Millions of households across the UK are facing an annual increase to energy bills of £139 starting from October 1 due to the rising costs of gas.

Nearly 1.5 million customers have been hit in just two weeks by energy firms collapsing under soaring prices.

Avro Energy and Green ceased trading on Wednesday and their 830,000 combined customers will be switched to a new provider by energy watchdog, Ofgem.

However, despite the upcoming increase to fuel bills next month, the financial guru warned “you are going to pay more, probably a lot more” and explained how the energy cap will rise even further next April.

He explained how 50% of homes in the UK are on the price cap, which limits the rates a supplier can charge for their default tariffs and means you are paying less than the wholesale price of gas.

On October 1, households will see a 12% hike in energy bills, rising to £1,277 a year.

Martin said: "What no-one is telling you and what's most important is what happens next, because the price cap changes every six months and it’s important to know that the current price cap is based on wholesale prices from the beginning of February until the end of July.

“But on the first of April next year we will have a new price cap and that is based on the current wholesale prices all the way up to the end of January.”

Martin explained how the maths from Cornwall Insight analysts indicates that based on the current run-rate, the price cap will go up to £1,455 per year - another 14% rise.

He warned: “When you’re thinking about the price cap, don’t think for the next six months, because energy isn’t about six months, what you have to think about is what happens next April and it is going to go up really high.”

Martin went on to explain how there are only two realistic options available to consumers.

The first is to do nothing and stick with the price cap and your current supplier.

He explained: “There is nothing that you can switch to that is cheaper, variable or fixed.

“If you’re on the price cap, you’re getting energy below the firm’s cost price, but come next April, if wholesale prices have dropped because of the time-lag, you’re still going to be on a high price, so then it could be destructive.”

Martin said the second option is to switch to the cheapest fix.

He said that the only reason you would go for this option is if you think wholesale prices are going to rocket more after April’s price cap so that going on a fix, would at least give you certainty.

However, he said this was a struggle as prices were changing rapidly as his research showed rates had risen from £1,170 last week to £1,480 today.

But he also said it’s still worth doing a price comparison and having a look: “Remember, most comparison sites hide tariffs that don’t pay them and virtually no tariffs are paying them right now so you won’t see any unless you click the options which says ‘show me whole of market’.”

Available help so you don’t have to choose between food or fuel

Earlier this week, Martin addressed the issue of paying for food or fuel this winter.

Writing in the MoneySavingExpert.com newsletter, he said: “I am very concerned about how those on lower incomes will cope with these horrific new energy prices, especially coupled with high inflation, the end of the Universal Credit uplift and furlough and self-employment support ending. It is the perfect price storm.”

However, householders should be aware emergency measures put in place due to coronavirus are still ongoing - your supply won't be cut off as disconnections have been suspended and prepayment customers can also get emergency credit.

Financial help available in Scotland

Martin adde: “Suppliers can also offer payment reviews, breaks or reductions. This is all case-by-case, so contact your firm as soon as you can if you start to struggle, and let it know if you're vulnerable.”

Those on lower incomes may also be able to apply for £140 towards bills via the Warm Home Discount, it’s important to note this isn’t cash in your hand, it’s money sent directly by the UK Government to your energy supplier to help reduce costs over the colder months.

Anyone in Scotland with concerns about managing their energy bills can contact energyadvice.scot for free, impartial and practical advice by visiting the website here, or calling 0808 196 8660 between 9am and 5pm, Monday to Friday.

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